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Hi, 55M/54F, currently $1.715M targeting $2.25M
Old 02-17-2018, 07:13 AM   #1
Confused about dryer sheets
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Hi, 55M/54F, currently $1.715M targeting $2.25M


There should be public school education on retirement. I found FIRE way too late and I'm embarrassed to say that it didn't occur to me that the purpose of working was to not work until about the last five years.

We are a 55 year old male married to a 54 year old female in a midwestern town in the United States. No kids. Combined annual income is currently $330K, we both contribute the maximum allowable amount to our 401Ks including the over 50 catch up and there is some company match. Total retirement savings to date is $1.715M, all in 401K.

Our retirement savings target is $2.25M which I understand is less than 8-10 times income but we have always lived well below our means and saved outside our 401K. This has allowed us to buy land in the country and build a house on it while remaining debt free. The value of that real estate asset is ~$900K. The house was built as age in place and we intend to stay here through retirement.

Our $2.25M target assumes a 30 year retirement with $115K per year in living expenses including $15,000 in property taxes (an average over 30 years of the current amount increasing at 2% per year), $18,000 in health care, $30,000 in vacations and entertainment and 25% taxes on everything including social security benefits as the major categories. We hope to get $36,600 of this from Social Security by taking it starting at age 62 and assuming we'll only receive 77% of the estimated benefit as per the social security trustees report. The rest will come from the $2.25M in 401K savings. If that works out it's a 3.5% withdrawal rate.

Projections at the current contribution rate is target reached in 4 years and 1 month at a 5% return or 3 years and 3 months at a 7% return. After the target is reached I'll probably quit my job and work at something less stressful until age 62. My wife likes her job and will probably continue until 62.

If it all goes wrong somehow first we may reverse mortgage the house and second the vacation fund comes out.

Can anyone point out any holes in this plan? Do you see any way to accelerate it? Please let me know what questions you have. Thank you in advance for looking at my retirement scenario.

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Old 02-17-2018, 08:38 AM   #2
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To accelerate your date, you have three options:
- save more now
- spend less in the future
- accept more risk and establish a withdrawal rate greater than 3.5%

For "save more now", each of you should open a tIRA and contribute $6500 then immediately convert those funds into a Roth IRA. Keep doing that every year.

You also say all your retirement savings is in your 401Ks, but you have "saved outside our 401K" as well. How much is in your after-tax accounts? Start thinking of it all as retirement savings, because you're going to need that after-tax money to live on if you are able to retire before 59.5.

For "spend less", are you sure you need $115K in living expenses? Maybe look at that again and see if it's realistic. After you retire, you have a lot more flexibility on when to travel and you may find that $30K is higher than you need.

Also, 25% of everything in taxes is a very high number, even if you live in a high tax state. For federal taxes, even if you took $115K out of your 401K and used the standard deduction, you'd only pay $17635, which is an effective tax rate of 15%.

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Old 02-17-2018, 12:42 PM   #3
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Can anyone point out any holes in this plan? Do you see any way to accelerate it? Please let me know what questions you have.
Seems completely reasonable to me. It's not clear exactly what you are looking to accelerate though.

If you want to get to a less stressful (and presumably less lucrative) job sooner, perhaps you can convince your wife to work past 62 to make up the difference.

If you want both your wife and you to fully retire sooner than 62, perhaps you can suck it up and work a few more stressful/lucrative years.

Hopefully, you already have your health insurance handled, and have looked into long term care insurance/funding. If it were me I'd seriously consider starting Social Security at 70 rather than 62 (at least for the higher earner). At least I'd run the numbers and compare the results. And you certainly have an idea of longevity in your family, but for me I'd consider at least 35 years of retirement rather than just 30.
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Old 02-17-2018, 02:21 PM   #4
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Sounds like a reasonable plan overall. I probably wouldn't go any higher than 3.5% WR at these market levels. Firecalc uses around a 3.5%-3.6% rate I believe for a 100% success rate. Plus you have a nice discretionary amount built in.
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Old 02-20-2018, 01:07 PM   #5
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What are you planning to do in retirement, esp. During the long Midwest winter Don't ask how I know... The 30K travel budget should help, but it can be a big change for both of you to be at home together most of the time unless you both have something to occupy your time. Think of it as the main "occupational hazard" of retirement.

If you hit "your number" before 62 yo, why would you w*rk until 62?? From what I've seen of our older friends, who are in their later 60s or 70's, good health and energy to enjoy becomes an increasing precious treasure . Even 5 years seems to make a big difference if you want to do something more active than TV watching. Unless you really love your w*rk, consider FIRE'ing once the numbers look good to you.
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Old 02-25-2018, 06:20 PM   #6
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Everyone has already said it all...

And I agree with's nice that such a large portion of your future budget is fun stuff...if the market goes south you simply take one fewer international vacation.
"Live every day as if it were your last, and one day you'll be right" - unknown
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Old 02-25-2018, 07:02 PM   #7
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I'd frame the issue a bit differently....IF you retired at 62 you would need $78.4k/year from your investments ($115k spending less $36.6k in SS).. divide that by 3.5% and you would need $2.24 million at age 62. If you want to retire before 62, then you would need the $2.24 million plus $36.6k for each year that you retire before age 62 to fill in for SS that you will not be receiving. So if you wanted to retire at 58 you would need ~$2.4 million.

That said, the $115k is probably a bit high if it includes 25% in taxes. Have you factored in that (at least currently) only 85% of SS is taxable? is a good place to sketch out your tax burden.

Also, there is no need to compound and average property taxes... if you just include your current property taxes that is sufficient since both withdrawals and SS both increase with inflation and cover any inflation in property taxes.

I suspect that once you refine taxes that you'll be a lot closer than you think!
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Old 02-25-2018, 07:06 PM   #8
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Before expending a lot of effort responding to the OP, note the one and only post by this new member is from early on 2/17, 8 1/2 days ago, and the OP hasn't returned to the forum since.
Numbers is hard

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Old 02-26-2018, 05:40 AM   #9
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Good point. Innovative screen name too.

If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
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